Consumer Cellular grows by catering to mature demographic

Consumer Cellular has grown its revenue from $17 million to $185 million in just six years by selling the newest technology to the oldest American consumers.

Now the Tigard-based mobile phone service provider expects to add as many as 250 jobs to its current employment base of 450 in 2012 and grow revenue by 35 percent as it edges closer to reaching 1 million customers. Along the way, Consumer Cellular stands out as proof of the Baby Boomer generation’s considerable buying power.

“Boomers aren’t that different from everybody else,” said Consumer Cellular CEO John Marick.

In other words, consumers aged 50 and up have as much of an appetite for mobile communications as younger generations, if to different degrees.

Aaron Smith, a senior research specialist with the Pew Research Center’s Internet & American Life Project, said that while America’s older generation has been hesitant to adapt to technology such as broadband Internet, it has wholly embraced mobile communication.

An estimated 85 percent of Americans between the ages of 45 and 64 have a cellphone, and a quarter of that age group have a smartphone, according to Pew Research Center data.

Citing data from media measurement firm The Nielsen Co., Consumer Cellular said smartphone ownership in the third quarter of 2011 grew 76 percent for consumers aged 55 to 64, and 50 percent for the 64-and-up set.

“The short reason why (Consumer Cellular) is smart to be doing what they’re doing is that’s where the growth is,” said Matt Thornhill founder and president of The Boomer Project, a marketing, research and consulting firm in Richmond, Va., that helps clients develop marketing plans aimed at older Americans.

For most of the past four years, the 18-to-49 market segment has been prevalent in the minds of marketers.

But Thornhill said that demographic might grow between 3 percent and 9 percent over the next 20 years. The the 50-plus segment will grow at least 25 percent based largely on the ascension of Baby Boomers.

“Anybody who can develop a product or service to that market, they’ve got guaranteed growth,” Thornhill said.

Fast growth

Consumer Cellular figured that out more than a decade ago.

Marick was working with Kirkland, Wash.-based McCaw Cellular Communications — once the nation’s largest cellular phone company — through its 1993 acquisition by AT&T, which renamed the company AT&T Wireless.

From there he co-founded Consumer Cellular as a re-seller of AT&T products, with the idea of designing service plans aimed at consumers who wanted a phone for convenience and security rather than regular daily use.

“We quickly realized who fit that model: the senior population,” he said.

It took a full decade to reach 30,000 customers. But the turning point came thanks to the 2004 merger between Cingular Wireless and AT&T Wireless, a deal that created the first nationwide wireless carrier.

“What that did was give us access to the whole population,” Marick said.

With a wider territory from which to tap, Consumer Cellular’s customer base grew to 700,000 this year and is projected to reach 900,000 this year.

Since 2009, the company has been the exclusive wireless provider for the AARP, which gives discounts to its more than 36 million members.

It also targeted retailers frequented by older consumers. In November 2010 it partnered with RadioShack, eventually reaching 265 stores.

In June it became available in 800 Sears stores nationwide. And as of Nov. 1 its phones became available in 826 Walgreens drug stores in Florida as part of a pilot program Marick hopes to expand in 2012.

No long-term contracts

The company has also tailored its selection of phones and wireless service plans to the needs of its consumers.

Consumer Cellular customers don’t sign long-term contracts. Instead, the company offers monthly service plans that start as low as $10 per month, and text and Web browsing options starting as low as $2.50 per month for 100 text messages and 4 megabytes of data.

It also offers a service that alerts its customers well in advance of surpassing their paid limit.

Among its phone choices are the Doro 410, chosen precisely because it has large buttons, bright screens, large text and an emergency call button.

“If you’re a heavy (data) user, our service won’t be a great fit,” Marick said.

With prices so low, Marick said the company’s profit margins are slim, making it something of a volume-based business.

With such a large customer base, the company has put an emphasis on consumer service.

Today the company employs 450, the majority of those being call center workers, in Phoenix and about 200 in the Portland area.

In 2012, the company expects to grow that figure to 700, mostly in Phoenix, where it’s looking to add a second call center.

Marketing to older consumers isn’t without risks.

As that age set expands, its familiarity with mobile communications will grow, too.

“The needs are going to change,” said Thornhill of The Boomer Project. “You don’t want to insult every boomer that already owns an iPhone.”

The point isn’t lost on Marick, who notes that Consumer Cellular has always been nimble in adapting to its consumers.

This year, for example, the company added the first smartphone to its arsenal of products in an effort to appeal to more tech-savvy customers.

“When we started, a majority of the people had never had a cellphone,” Marick said. “Today, that’s completely different.”

Fast Facts

Consumer cellular received Consumer Reports’ highest rating for customer satisfaction for contract carriers in an article published in December.